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Performance Appraisal Methods for Startups & Small Businesses

Performance appraisal methods are such methods which are used in a business to judge the employees based on their skills and performance levels. These tests decide whether an individual is capable of working in that business or corporate sector or not. There are many tests to evaluate and update the employees based on their performances, and some of these methods are mentioned below. Read on carefully below to know what they are.

Basic evaluation methods:

This method is the basic one to judge the employee by keeping in check their performances and skills and deciding their future place into the business. Such methods are used in a business to update the employees about how they have been working lately. After getting their evaluations, visible improvements have been seen in the employees who are either motivated with their good work or are ashamed of their average performances and work hard to make up for it. This method is also used to decide which employee deserves a raise or a promotion to have them get what they deserve.

Behavioral observation method:

This kind of observation method is used to evaluate a person on the basis of their behavior by taking this test. This test becomes applicable when the employees complete a certain period of time into the business or a company and thus needs a checkup on their behavior. This kind of test contains a set of questions where a person needs to answer them in yes or no. This test is taken not when a behavior needs to be addressed, but to confirm whether a behavior is as it was suspected to be or not. This is basically a confirmation test of the behavior.

Graphic rating scale method:

This method is used to determine whether the skills and performances of the people working in a business are being beneficial to it or not. Moreover, this entire rating method consists of various qualities being printed on the paper and presented to check the employees whether they possess these skills or not. However, these rating methods are not fully ensured on the basis of its accuracy. But still this method is used to judge how much the employee fits on the skills that are mentioned and how exactly will that benefit the business to flourish?


As one can judge it clearly from its name, this kind of evaluation is made by the person or an employee to judge themselves from a given set of criteria. These kinds of tests give a person their own judgment and what changes do they need to make in their performances. These tests are mostly confidential but not for the boss. Self-evaluations help a person recognize their strengths and weaknesses in their own comfort-zone. However, here a person obviously can be too biased about themselves and may or may not evaluate themselves too high or too low. A thorough discussion is then done among the business owner and the employee.

Grading system:

Grading Policy

To simply explain this, a grading system is used to award the employees from a set of grade which normally ranges from 1-10. Every set of business has a different grading system to check and grade their employees from. And mostly, an accurate result can be taken out from such tests which records the employee’s working skills and performances. Moreover, it is important for people running a business to set up your expectations in a way that it becomes very clear for the people working under you. Grade fairly and clearly.

360-degree performance checking method:

This kind of methods are the most interesting, yet the most risky ones to be carried out in a business sector. 360-degree performance checking scale stands for the evaluation which an entire set of employees does for a particular person. This way, a thorough evaluation can be made for that employee by various different perspectives. The reason why it can be risky is because the people often are biased and hold grudges for anyone and this kind of evaluation can prove to be bad for a person’s career if there are people who are against them. The manager or the boss should make sure that these evaluations are being done fairly and which proper explanations and proofs.

The possible outcomes:

Possible Outcomes

Judging by the various evaluation methods that are mentioned above, it is safe to say that they can be used successfully in a business to make sure that the people working under it are being fair to their work and are showing good results. After all, the future and success of the business depends upon their skills and performances so it is essential to use these methods to check who are fit for working there and what changes and updates needs to be made in it.

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